The literatures on differential commodity taxes and on quantity controls to supplement income taxation have developed separately. This paper combines these two strands in the standard framework of optimal nonlinear income taxation. The authors use a model with two types of households where the...

This paper addresses the question of the optimal taxation of labour and interest income in an overlapping generations model with two unobservable characteristics, ability and inheritance. We assume realistically that saving can only be taxed anonymously, whereas the tax on labour earnings can be...

This paper derives the optimal commodity tax formula and the tax reform rule that should be used in a situation of (orthodox Keynesian) unemployment. The setting considered is a four-good, one-individual model with fixed real wage implying an excess supply of labor. The presentation is very...

<link rid="b14">Rochet (1991)</link> showed that with distortionary income taxes, social insurance is a desirable redistributive device when risk and ability are negatively correlated. This finding is re-examined when "ex post" moral hazard and adverse selection are included, and under different informational...

We consider a two-period overlapping generations model in which individual voters differ by age and by productivity. In such a setting, a redistributive pay-as-you-go system is politically sustainable, even when the interest rate is higher than the rate of population growth. The workers with...

This paper incorporates tax evasion into the analysis of optimal linear income taxation. Tax evaders can influence the probability of being caught, if audited, through expenditures on concealment. It is proved that tax evasion can make a given tax system more as well as less progressive...